(Reuters) - Canadian lender Home Capital Group Inc on Wednesday named mortgage industry veteran Yousry Bissada as its chief executive officer, and Bissada said he expects to take about three months to draw up a plan to turn the business around.
Home Capital had been searching for a new top executive since March after it terminated Martin Reid as CEO, the beginning of a series of events which led investors to withdraw 95 percent of deposits from the lender’s high-interest savings accounts.
Home Capital shares have lost more than half their value since the start of the year.
Bissada will need to rebuild relationships with mortgage and deposit brokers, and he must also navigate the business through regulatory changes, which could make it harder for sub-prime lenders such as Home Capital to do business in Canada.
Regulators have turned their focus on risky lending amid fears of housing bubbles in Toronto and Vancouver and are proposing tougher rules on some mortgages.
Home Capital plays an important part in Canada’s mortgage market because it serves borrowers such as recent immigrants and the self-employed who may not qualify for loans from the country’s biggest banks.
Bissada, who has 30 years experience in the industry, said he had been in talks about taking the CEO role for “six or seven weeks.”
“When I heard that they were hiring for a CEO, I put my hand up right away,” he told Reuters. “I looked at the opportunity of a company that I thought had a very strong nucleus and, with some hard work, could be where we want it to be.”
Bissada said he would look to utilize his “great relationships” with mortgage and deposit brokers when he takes up the role on Aug. 3.
“I have received fantastic support today — by way of emails, calls, texts — from the mortgage broker industry, all very supportive that I’m the guy to do this job,” he said.
“It will take about a quarter to either have a plan or be in a good position to know when we’ll have a plan so that we can have a clear option on what we want to get done,” he said.
Home Capital was forced to raise new capital in April after depositors started withdrawing funds from its high-interest savings accounts after the company terminated Reid on March 27.
The withdrawals accelerated after April 19, when Canada’s biggest securities regulator, the Ontario Securities Commission, accused Home Capital of making misleading statements to investors about its mortgage underwriting business. Last month, Home Capital settled with the commission and accepted responsibility for misleading investors..
Also last month, Home Capital secured an equity injection and a C$2 billion ($1.5 billion) line of credit from Warren Buffett’s Berkshire Hathaway.
Bissada, 57, is currently chief executive of Kanetix Ltd, a provider of digital services to the insurance market. He was previously chairman of two mortgage lenders, Canadiana Financial Corp and Paradigm Quest Inc.
Bissada also said he would take an active role in the company’s search for a chief financial officer.
Shares of Home Capital closed down 0.2 percent on Wednesday.
Additional reporting by Nivedita Bhattacharjee and Yashaswini Swamynathan in Bengaluru; Editing by Bernard Orr and Leslie Adler